Can We Shame the Biggest Banks into Finding a Conscience?

It sounds like a long shot, but New York City Comptroller John Liu (right) is willing to give it a try. Liu leads a group of public pension fund managers in five states who released a letter Sunday demanding the banks investigate their mortgage and foreclosure practices.

The letters went to Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C). Liu’s group includes state retirement funds in Connecticut, Illinois, North Carolina and Oregon and has $432 billion in assets.

The campaign is nothing if not well timed. On Friday, bank stocks tumbled after a Massachusetts court ruled two 2007 foreclosures invalid on the grounds the banks couldn’t prove they owned the mortgages. One justice blasted Wells and U.S. Bancorp (USB) for their “utter carelessness” in handling homeownership documents.

“The banks’ boards cannot continue to pretend the foreclosure mess is the result of technical glitches and paperwork errors,” Liu said.

That remains to be seen, alas. The banks didn’t exactly beat a path to Liu’s doorstep to ask how they might stay in the pension funds’ good graces, in spite of the $5.7 billion the funds have invested in the banks. That sounds like a lot, but it’s a rounding error next to the big four’s combined market value of $625 billion.


States press banks on foreclosures: update – Street Sweep: Fortune’s Wall Street Blog.

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